It's been several years since my Special Situations portfolio acquired shares in Grupo Prisa (NYSE: PRIS)(NYSE: PRIS-B), and it's been little short of painful. What began as a very interesting and idiosyncratic situation ended up in a substantial loss, as Spain's economy continued to falter. Fortunately, I took only a modest position in the stock, and the effect across the portfolio was minimal.
My portfolio bought stock in the ailing Spanish media company in early 2011 as the company began to deleverage its balance sheet via asset sales. The company owns attractive media assets in Spain and a publishing unit that is heavily exposed to the fast-growing economies of South America. But while the Spanish economy briefly seemed like it might look up in 2011, the situation continued to decline.
It wasn't much after my purchase that the situation clearly worsened, and I opted not to add more to the investment. While down around 70%, the total initial position amounts to less than 1% of my capital today. So while painful, this loss didn't hurt my portfolio that much.
My Special Situations portfolio acquired the B shares because they paid a hefty dividend while the A shares offered none. Later, as funds became tighter at the company, it paid out the dividend in A shares, so the portfolio ended up with both classes of stock. I'll be selling all my stock in Prisa later this week.
This has been one of the rare losses in my Special Situations portfolio, I'm happy to say, and I've got a swath of new ideas that I think could make you a lot of money over the coming year. If you'd like to know what those ideas are, follow me on Twitter (@TMFRoyal) for the latest.
